When the refurbished Bombay House opened its doors on July 29, 2018, it marked another moment in history for the iconic headquarters of the Tata group. The new had not replaced the old. Instead, the conventional core received a contemporary brush, with high-tech offices, a digitally enhanced visitor experience centre, doors that open with the touch of a finger, and a cool Starbucks outlet, too. The structure from the British era, which was completed in 1924, retains its neo-classical look. Yet, it is in touch with the times. The evolution of the Tata group itself is not very different. The conglomerate, which began life in 1868 as a private trading firm founded by Jamsetji Nusserwanji Tata, and then moved into hotels, steel, automobiles, power, IT, financial services, retail and a myriad other businesses over the past century and more, now readies itself for a new world shaken frequently by large doses of disruption. Yet, there are exciting opportunities that emanate from that very disruption, which could further propel the transformation of the 155-year-young conglomerate.

Spearheading this unique transformation is Natarajan Chandrasekaran, 59, a soft-spoken man who takes tough decisions easily. There is an easy informality to the persona of the seventh Chairman of Tata Sons, borne perhaps of his software background—he insists on being called Chandra during his interaction with BT for this story—but there is nothing informal or easy about the task he has before him, or about what he has overcome thus far. His story at the top of the Tata group began as a surprise appointment in February 2017 following one of corporate India’s biggest scraps—a boardroom battle that saw erstwhile chairman Cyrus Mistry (since deceased) being ousted followed by an acrimonious court battle and slanging matches. The markets were jittery, and the group’s direction seemed unsure. But Chandrasekaran, once appointed and settled, changed it all. “He brought in the much-needed calm, and markets immediately recognised that under his leadership, the group was in safe hands,” says HDFC Chairman Deepak Parekh. “If one knows Chandra well, he is open and frank about where he sets his boundaries in his capacity as Chairman of the group.”

The mark of a good leader is one that leads from the front‚ and one that takes both the bouquets and brickbats with the same composure. That’s Chandra for you

Deepak Parekh
Chairman
HDFC

Chandrasekaran’s leadership has eased the Tata group’s growth stutter into a nice, firm rhythm, almost synonymous with his tempo on a marathon run, soft feet, sure footing, steady pace, no rush, no frenzy, yet effective. “Chandra is a great combination of a marathon runner and a chess grandmaster,” says Amit Chandra, Chairperson of Bain Capital Advisors (India) and a former Tata Sons board member. “He does not play for the short term. His moves are carefully thought through and strategic.”

The man himself stays humble and focussed on the job. “I am still growing into [the job] and I don’t think I will [ever] fully grow into it,” says Chandrasekaran, sitting assuredly at his desk in the Chairman’s office on the high-security fourth floor in Bombay House. “It is a journey and I consider myself fortunate to be here.” (Read his interview on page 68.) To be sure, it is not easy to get used to leading a $128-billion conglomerate with 30 companies across 10 verticals and hundreds of subsidiaries across most businesses you can think of, employing an estimated 935,ooo-plus people across six continents and 100 countries.

N. Chandrasekaran
Chairman
Tata Sons

A small anecdote here to underscore this heterogeneity. Soon after he took over as Tata Sons boss, he was with his father in Mohanur, their hometown in Tamil Nadu. As news of his visit spread, a local Tata Motors dealer sent a kit that had agricultural tools and implements with the Tata group logo. “I had no idea which group company made them and asked Harish Bhat [Tata Sons Brand Custodian], who managed to find out that it came from a subsidiary of Tata Steel,” says a smiling Chandrasekaran, who joined the conglomerate in 1987.

That situation has certainly changed, albeit it has been anything but easy. From running one company (software giant TCS, as its CEO from 2009 to 2017) to taking a huge leap to run the entire Tata group is not a task for the faint-hearted. According to Sougata Ray, Thomas Schmidheiny Chaired Professor of Strategy & Entrepreneurship Practice at ISB and a long-time tracker of Indian conglomerates, the challenge and complexity of running the group when it was marred in an unfortunate controversy surrounding leadership succession must have been daunting for a non-family professional. “The influence of the Tata Sons Chairman on the group companies, to a large extent, is derived from the positional authority and personal charisma of the leader. That was an open question as the legacy of Ratan Tata still loomed large. In that sense, gaining acceptability, trust and respect among the top leadership team across the group companies was the foremost challenge,” says Ray, adding that it is remarkable for Chandrasekaran to have earned that pretty quickly and quietly without much of a fuss.

“Chandra spent the first few years building the framework for the long term and fixing the most burning issues,” says Amit Chandra of Bain, adding that thereafter he shifted gears to pursue robust and sustainable growth, accompanied by strong shareholder value creation. And value he has created aplenty. Between FY17 and FY22, the group’s return on capital employed (ROCE) and return on net worth (RONW) went up from 13.5 per cent to 22 per cent, and from 11.5 per cent to 21 per cent, respectively, research by BT shows. Also, the consolidated revenues of the group rose to Rs 9.56 lakh crore in FY22 from Rs 6.56 lakh crore in FY17. In the same period, as per data from ACE Equity, the group’s listed companies have cumulatively grown their market capitalisation by an astonishing 149 per cent. That is akin to an elephant sprinting at the pace of a leopard.

Chandra is a great combination of a marathon runner and a chess grandmaster... He does not play for the short term. His moves are carefully thought through and strategic

Amit Chandra
Chairperson
Bain Capital Advisors (India)

More pertinently, unlike earlier times, non-TCS companies have contributed their might to this growth sprint. While TCS’s share of group revenues has stayed at around 20 per cent in the six years that Chandrasekaran has been at the helm, its share of net profit has fallen from 90 per cent-plus to around 50 per cent now. This, despite the fact that TCS, a Rs 2,25,458-crore (FY23 consolidated revenues) behemoth that is among the world’s top 10 IT services companies by revenue, has itself seen its top line and bottom line climb an unreal 91 per cent and 60 per cent, respectively, from FY17 to FY23. This clearly indicates that other companies, which have played second, third, fourth, nth fiddle to TCS over the years, are now growing faster than the software major, and striving to claim their rightful place under the Tata sun.

Sweet irony that this trend is being driven by a man with software in his blood. No wonder the Jury of the BT-PwC Best CEOs Awards were unanimous in selecting Chandrasekaran as the recipient of the Business Icon of the Year award.

The group had been on a growth path for several years, but there were niggling issues. According to Rajiv Memani, CEO of EY India, while a few businesses faced strategic challenges, “Chandra with his 3S strategy of simplification, synergy, and scale, addressed them well”. That meant giving strong, strategic direction to businesses that were not doing well. “He attracted the right talent at CXO-level positions and got in those who share his values and mindset. At the same time, hard and bold decisions [were made] on some assets,” says Memani. One such hard decision was on exiting the cash-guzzling industry of telecom, when its consumer mobile business, Tata Teleservices, was merged with Bharti Airtel, a process that was completed in July 2019. “It was a business I had to decide on quickly,” says Chandrasekaran. Memani gives him credit for his focus on creating future multi-billion-dollar businesses “by doubling down on financial services and new economy businesses like bigbasket, 1mg, Tata Neu, pivoting the group completely towards new areas of growth. Simultaneously, he has looked at value creation in high-tech manufacturing, including EV batteries and semiconductors.”

Chandrasekaran’s approach has manifested in multiple ways through his decisions and strategy for different businesses. Take, for instance, the doggedness in the buyout of state carrier Air India. Nationalised in 1953 after being acquired from the Tatas, the airline returned home in early 2022. “It was a tough one and it helped that the government was keen on getting it done. We worked on it for a year with a team of 150 people,” says Chandrasekaran. In Parekh’s opinion, the takeover of Air India and the subsequent mega airplane order (in February 2023 for 470 aircraft worth $70 billion), will always be highlights of Chandrasekaran’s career.

Or take Tata Steel, which doubled down on its India growth strategy with M&As, especially the buyout of Bhushan Steel in mid-2018 for Rs 35,200 crore. “Tata Steel needed to have scale in India because its business was equally split between the domestic market and Europe,” says Chandrasekaran. “The issues in Europe could not be solved overnight and the only way to do it was to make India 90 per cent. So, I was quite aggressive in buying Bhushan Steel and that completely changed the game.” Says Memani of EY: “If you don’t think scale, you can’t work with Chandra!” The M&A strategy was also effectively used to pick up digital-native start-ups 1mg, Curefit and bigbasket.

Guiding some businesses in a different direction was also on the cards. One such was demerging the consumer products business of Tata Chemicals and merging it into Tata Consumer Products Limited (TCPL, earlier known as Tata Global Beverages). “I told them that [TCPL] was not a beverage company but an FMCG company. That’s why we called it Tata Consumer Products,” emphasises Chandrasekaran. One of the directors of the erstwhile Tata Chemicals expressed some apprehension and wrote to him saying, “You should not be doing this.” Believing it was a view that combined concern and love, he recalls how the same individual wrote back later saying, “It was done incredibly well.”

The increase in the group’s market capitalisation since he took over is a testimony to the strategic transformation Chandra has led

Rajiv Memani
CEO
EY India

Another company that Chandrasekaran helped change direction was Tata Motors. He recalls how the government said it wanted to move on electric vehicles (EVs). “I called the team at Tata Motors and told them I am not an auto guy, but we need a car in six months,” he narrates. Guenter Butschek, then Tata Motors’ CEO and an industry veteran who had spent many years at Daimler AG, replied with a wry smile that it takes three to four years to build a platform. Not willing to take no for an answer, the Chairman then asked for Butschek’s Executive Assistant, Shailesh Chandra (since elevated to Managing Director of Tata Motors Passenger Vehicles and Tata Passenger Electric Mobility), a person whom he was impressed with. “Quickly, I asked Shailesh to put together a team and he got in talent from group companies like Tata Chemicals and Tata Elxsi,” he says. Over 50 members parked themselves in the company’s Sanand plant and the work was done. “We removed the internal combustion engine and put the battery in. There were teething problems, but it worked out and we got our share of the tender.”

Today, Tata Motors’ EV successes include Tiago, Tigor and Nexon, and its overall share in passenger vehicles is a whiff away from second-placed Hyundai, a momentous feat for a company that till a few years ago was perceived as a taxi maker and was struggling to connect with the personal vehicle buyer.

Chandrasekaran has another reason to be happy. He has a home in Palava City, about 50 km from Mumbai. Soon after he took over as Chairman, his wife Lalitha would count the number of cars on the way there. “Where are the Tata Motors cars?” was a constant question from her, since the road was overwhelmingly dominated by the likes of Maruti and Hyundai. “We surely have a presence today; it may not be three in five cars but two or one in five. We have travelled some distance,” he says with a wide smile. Today, Tata Motors has multiple models selling 10,000 units a month. “That had never been the case [earlier] and analysts wonder how this is true. It’s hard for a lot of people to believe that our PV, CV and JLR (Jaguar Land Rover) businesses are making a profit,” he adds with a laugh.

Chandrasekaran also gave strategic inputs to Tata Power, which was struggling for growth in revenue and profit. In FY21, the company had consolidated revenues of Rs 32,703 crore but net profit of only Rs 1,439 crore. By entering new markets and business opportunities like renewable energy, net profit increased to Rs 2,156 crore on revenues of Rs 42,816 crore. “Now, we will be close to Rs 4,000 crore [in net profit in FY23],” he says.

Hopping back to the 3S strategy, Memani’s view is that Chandrasekaran has brought synergy between the group companies in a manner that now has more impetus on leveraging technology. “The business structure is a lot simpler with a focus on achieving scale in both traditional and new businesses with the use of technology,” he says. “The increase in the group’s market capitalisation since he took over is a testimony to the strategic transformation Chandra has led.”

Despite being a software man, Chandrasekaran says he is extremely bullish about the group’s conventional businesses such as Tata Steel, Tata Power and Tata Motors’ commercial vehicles business. “I also like the way Indian Hotels is reinventing itself by keeping the exclusivity at the high end or what they are doing with Ginger,” he says.

On Tata Motors, he says with a smile that the commercial vehicles piece is as important as passenger vehicles. A big moment for the company was the acquisition of JLR in 2008 and he touches the wood of the table gently before outlining the plan. “I am hoping it has great years ahead. It is very strong operationally with iconic products, and there is a lot of optimism about the pipeline for 2024-25. We must get it right with the electric range apart from fixing issues around the supply chain,” says Chandrasekaran. Ways to derive synergies between Tata Motors and JLR is an ongoing exercise. “Opportunities in engineering, design, supply chain will also be looked at, or how we can increase JLR’s sales in India.”

From a long-term perspective, defence is another area of interest, where he sees scale and the need to export. “We see opportunities in the US, the UK and the rest of Europe and Japan. India will also buy a lot of defence.” There’s also a new foray planned into semiconductor manufacturing through group company Tata Electronics, which announced the appointment of former Intel Foundry Services President Randhir Singh as its CEO & MD in April.

So, what is Chandrasekaran in the leadership role all about and how can one assess him in the midst of a complex business environment juxtaposed against a group that is unbelievably heterogeneous? “The mark of a good leader is one that leads from the front, and one that takes both the bouquets and brickbats with the same composure. That’s Chandra for you,” says Parekh of HDFC, adding that his relationship with the Tata Sons Chairman goes back much before he took over the corner office at TCS in 2009. “I have known him way before that. In 2001, we worked together on a joint venture between HDFC and TCS. That was Intelenet, one of India’s earliest business process outsourcing (BPO) firms. Even at that time, I gauged he was an unusually bright young man.”

In February 2022, Chandrasekaran was reappointed Chairman of Tata Sons for five years. “We have all the pieces and now need to execute,” he says, on the difference between his first and second term. “It is a 3S-plus-one strategy, with talent being the addition. There is a need to prepare our companies for the future, bring in a lot more depth in new technology and be more agile.” Apart from the obvious big boys in the group, it has high performers like Titan, Tata Auto Components, and Tata Elxsi. “We will list Tata Technologies and there is a lot to look forward now at Tata Communications.”

Bain Capital’s Chandra highlights the current global scenario to drive home the point on where the Tata group is placed. “At a point of time when India is a rare shining spot globally, cash flow-based value creation is once again valued and there is increased scrutiny on the ESG front by all. The Tata group is very well positioned to capitalise on growth opportunities. Chandra has brought a lot of discipline to capital allocation and some of the futuristic investments are jointly equity-funded by external investors to share risk,” he says. Chandra thinks the group is not shunning new-age opportunities but actually incubating some of them internally: “That is a much smarter way to play the long game.”

For Chandrasekaran, the current term is about hard work every day. “I get involved wherever there is a need. We have people who are very good at strategy and execution, and our approach has been horses for courses,” he says. Of course, there is no dearth of that nasty surprise. “We thought we were ready with our automobile business after having fixed all the issues. Then, we had the semiconductor crisis. Steel was looking great till export duty came and changed everything.”

Challenges are an inherent part of any business’s story. “Perhaps the two things it [Tata group] will need to think harder about are how talent today views jobs, which has changed a lot in the last decade. And to keep accessing quality talent, it might have to do some things differently. Secondly, the pace of disruption has picked up over the past decade and while it might slow down a bit with a funding winter, that might be temporary. It means the group will have to stay agile and be ahead of the curve in changing strategy,” says Bain Capital’s Chandra.

Meanwhile, Chandrasekaran is clear that as a culture, the group must be more agile and, as he puts it, be prepared to “fall forward”. Meaning? “It is okay to fail, and the only time you won’t fail is when you don’t do anything. Fall, but have the energy to get up and run again.” That’s the kind of touch and calming influence that will be critical to the Tata group as the world of business goes through one of the most disruptive phases ever seen.

For the man, a personal milestone of turning 60 in June would only spur him to greater heights. “I need to be at my fittest at 60,” he says. He would be echoing the collective voice of the entire Tata group.